Despite Losses, Ford Rejects Federal Loans Ford Motor Co. lost nearly $6 billion in the last quarter of 2008, and burned through $5.5 billion in cash. The company insists, however, it will not need to tap federal bridge loans. The company is optimistic it can take a different path to recovery than Chrysler and GM.
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Despite Losses, Ford Rejects Federal Loans

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Despite Losses, Ford Rejects Federal Loans

Despite Losses, Ford Rejects Federal Loans

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MICHELE NORRIS, Host:

This is All Things Considered from NPR News. I'm Michele Norris.

ROBERT SIEGEL, Host:

And I'm Robert Siegel. The Ford Motor Company reports that it lost nearly $6 billion in the last quarter of 2008, and still, the company continues to insist it will not need federal bridge loans. Michigan Radio's Tracy Samilton reports on why Ford is optimistic that it can take a different path to recovery than its rivals Chrysler and GM.

TRACY SAMILTON: American flags flap over Varsity Ford's lot in Ann Arbor on this cold, sloppy January day. In the best of years, January is not a good month for car sales, and this is far from the best of years. Today, salesman Noel Walsh helps two long-time Ford customers who want to trade-in their current Escape for a new Ford but with better gas mileage.

NOEL WALSH: I can tell you when you drive the Flex, you're going to fall in love with it, you really are.

(SOUNDBITE OF LAUGHTER)

NORRIS: Should I save it for last then?

WALSH: Probably save it for last, right.

(SOUNDBITE OF LAUGHTER)

WALSH: So, why don't we do that then. We'll do the Escape, we'll do an Edge, and then we'll do a Flex.

SAMILTON: The customer is even asked to drive a Taurus, even though they're clearly interested in the crossovers. Salesman Matt Stanford, the nephew of the owner, watches the transaction. His family has owned dealerships for decades and bought this one from a dealer who went bankrupt in 1981, another very bad time for the auto industry. Stanford was only six then, but says older family members talk about those days a lot at the dinner table.

MATT STANFORD: So, yeah, there's a little, I wouldn't say fear, but there's a little tension when it comes to the future of Ford Motor Company, the Big Three, but we're standing strong, we're here six days a week, and we're going to sell cars, that's what we do.

SAMILTON: The news that arrived today from headquarters was not good. Ford reported a record $14.6 billion loss in 2008, yet the company maintains it will not need to ask for bridge loans from the federal government. Instead, Ford will take out $10 billion in private loans, and Ford CEO Alan Mulally says the company will keep cutting costs.

ALAN MULALLY: Clearly, the recovery is going to be longer and a little bit deeper than everybody thought. And so, the most important thing is continue to size our production of the new vehicles to the real lower demand.

SAMILTON: But Mullaly insists there is good news buried in the headlines. For one, Ford increased its market share in October, November and December. Sales of the new Ford F150 truck were brisk last month, and the company is rolling out new and redesigned vehicles. Auto industry analyst Eric Merkle says it's not all spin. He thinks Ford's strategy is just about perfect.

ERIC MERKLE: The plan has been executed flawlessly in terms of lowering their overhead cost structure, getting rid of brands that really don't matter and focusing really on one global Ford.

SAMILTON: There's just one big threat to this seemingly flawless plan - the U.S. and global economies are fragile as egg shells right now and are outside Ford's control. Ford thinks U.S. vehicle sales will rebound in the second half of this year, reaching an anemic12.5 million for the year. If that happens the company says it has the liquidity to make it on its own. If the economy becomes a worst case scenario, Ford, too, could find itself knocking on the door of the U.S. Treasury for a bridge loan. For NPR News, I'm Tracy Samilton in Ann Arbor.

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